The auto parts maker could face liquidation, with its benefit plans for all retirees being terminated and, most likely, taken over by the government.

Perhaps no group of workers is more interested in the fate of General Motors than the retirees of Delphi, the auto parts maker that remains in bankruptcy after the company—along with its employees and their pensions—were spun off from GM a decade ago.

Consider Jim Frost.

After working as a salaried employee for GM for 26 years, he—along with his pension and retiree health care obligations—were spun off as Delphi in 1999. Five years later, at age 50, he retired.

Then, in 2005, Delphi filed for bankruptcy. The Troy, Michigan-based auto parts maker expected to emerge stronger a couple years later, but that has not happened. Now it faces the possibility of liquidation as its biggest customer, GM, contemplates bankruptcy itself.

Delphi faces a deadline Friday, April 17, to outline an agreement detailing the kind of financial support it can expect to get from GM, which accounted for 31 percent of Delphi’s total sales in 2008.

The kind of deal that emerges could determine the ability of Delphi to operate and meet its financial obligations. If a deal is not reached, Delphi could face liquidation. Its benefit plans for all retirees would terminate and, most likely, be taken over by the federal Pension Benefit Guaranty Corp., which would reduce considerably the payout each retiree receives.

Already, the benefits Delphi promised its retirees have begun to evaporate.

Delphi salaried retirees had no such luck, and their pensions remain 50 percent underfunded. GM said in its restructuring plan, however, that the company would not fund either the hourly or salaried Delphi retirees’ pensions, making it likely that the government would take over the pensions.

Bob Stevenson, a pension attorney at Stevenson Keppelman Associates in Ann Arbor, Michigan, said unsecured creditors such as Delphi salaried retirees would be less likely to receive funding should GM file for bankruptcy, since they are a smaller group of workers than those at GM.

“There might be a greater effort to prop up the existing GM plan and not have it terminate in bankruptcy, whereas it might be more affordable for a Delphi plan to terminate in bankruptcy,” he said.

“Our goal,” Delphi spokesman Lindsey Williams said, “is to devise a workable solution to our pension funding issues. What the resolutions are has yet to be determined.”